Models for Non-Exclusive Multinomial Choice, with Application to Indonesian Rural Households
AbstractTextbook discussions of discrete choice modelling focus on binomial and multinomial choice models in which agents select a single response. We consider the situation of non-exclusive multinomial choice. The widely used Marginal Logit Model imposes independence and has other disadvantages. We propose two models which account for non-exclusive and dependent multiple responses and require at least one response. In the first and simpler specification, the Poisson-multinomial, households first choose the number of responses to a specific shock, and then the specific choices are identified to maximize household utility conditional on the former choice. The second specification, the threshold-multinomial, generalizes the standard multinomial logit model by supposing that agents will choose more than one response if the utility they derive from other choices is “close” to that of the utility-maximizing choice. We apply these two approaches to reported responses of rural Indonesian rural households to demographic and economic shocks.
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Bibliographic InfoPaper provided by Department of Economics, University of Trento, Italia in its series Department of Economics Working Papers with number 0724.
Date of creation: 2007
Date of revision:
Discrete choice models; Marginal logit; Shocks; Risk coping strategies;
Find related papers by JEL classification:
- C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions
- C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
- O12 - Economic Development, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
This paper has been announced in the following NEP Reports:
- NEP-AGR-2007-11-10 (Agricultural Economics)
- NEP-ALL-2007-11-10 (All new papers)
- NEP-DCM-2007-11-10 (Discrete Choice Models)
- NEP-DEV-2007-11-10 (Development)
- NEP-ECM-2007-11-10 (Econometrics)
- NEP-SEA-2007-11-10 (South East Asia)
- NEP-UPT-2007-11-10 (Utility Models & Prospect Theory)
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